Credicated - Keep Your Cards Active!
Oct 10, 2025 | 9:26 am
#16
Join Date: May 2013
Location: New York
Programs: UA Silver, Marriott LTPP, Hertz Five Star
Posts: 1,238
I'll actually say with the OP that I think this service has a convenience factor if you've already got a 99 cent iCloud subscription, or if you value your time more than the effort to go through your sock drawer and then buy $1 amazon giftcards (which you can't even do reloads of $1 on Amazon anymore) to keep cards active.
The argument on minimum transactions to get rewards or avoid an account monthly fee... eh. I don't think the math works on that one.
By the way OP, saying this legitimately, generally it is against the terms of your merchant acquirer and the network to use your own debit/credit card at your own business, because it's an easy way to avoid cash advance fees (versus much lower swipe fees). If you are using this service to charge your own cards, I would stop immediately.
The argument on minimum transactions to get rewards or avoid an account monthly fee... eh. I don't think the math works on that one.
By the way OP, saying this legitimately, generally it is against the terms of your merchant acquirer and the network to use your own debit/credit card at your own business, because it's an easy way to avoid cash advance fees (versus much lower swipe fees). If you are using this service to charge your own cards, I would stop immediately.
Oct 10, 2025 | 9:30 am
#17
A FlyerTalk Posting Legend
Join Date: Sep 2009
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1) 7% APY includes the effect of compound interest. if you already have 10k in the account, any interests earned during the year is above the 10k, which do not enjoy the higher interest rate. hence it is impossible for you to earn $700 per year. at best, it is 6.785% or $678.5
2) US median income is about 50k, which correspond to the 22% tax bracket. you add in state and local taxes (it varies, but let's say 10% total*) and 7.65% for FICA. this brings your total taxes to 39.65%. i will just round this off to 40%, so the interests after taxes is $407. for people who earn more and hit another income bracket, this number is going to be smaller
of course, the numbers would be better for some and worse for others depending in income and where you live
*the lowest state and local taxes per capita is $4,722 (State and Local Tax Collections Per Capita by State, 2025)
if i open an account for my wife, the costs to me also double, so no benefit there. unless you are hoping that the wife doesnt work. but i think most family are dual income nowadays. similarly, every additional account i have incur costs and hence give me marginal returns for my efforts
one can do what you suggest here, have the headache of maintaining many accounts, face decreasing interest rates, have their interests taxed and lost as payments to you, or one can just invest those money. as the interest rate falls, this is going to make less and less sense mathematically; even if the need for your services remain, they can no longer justify your services
also, many of these CUs have some requirements; they maybe geofenced or required some membership or donation or etc. the initial effort to set up these accounts also means the population is more niche. and for people who are willing to go through such lengths to set up these accounts, are they more likely to do 15 transaction themselves or will they pay $108 for the service? my bet is on the former
2) US median income is about 50k, which correspond to the 22% tax bracket. you add in state and local taxes (it varies, but let's say 10% total*) and 7.65% for FICA. this brings your total taxes to 39.65%. i will just round this off to 40%, so the interests after taxes is $407. for people who earn more and hit another income bracket, this number is going to be smaller
of course, the numbers would be better for some and worse for others depending in income and where you live
*the lowest state and local taxes per capita is $4,722 (State and Local Tax Collections Per Capita by State, 2025)
if i open an account for my wife, the costs to me also double, so no benefit there. unless you are hoping that the wife doesnt work. but i think most family are dual income nowadays. similarly, every additional account i have incur costs and hence give me marginal returns for my efforts
one can do what you suggest here, have the headache of maintaining many accounts, face decreasing interest rates, have their interests taxed and lost as payments to you, or one can just invest those money. as the interest rate falls, this is going to make less and less sense mathematically; even if the need for your services remain, they can no longer justify your services
also, many of these CUs have some requirements; they maybe geofenced or required some membership or donation or etc. the initial effort to set up these accounts also means the population is more niche. and for people who are willing to go through such lengths to set up these accounts, are they more likely to do 15 transaction themselves or will they pay $108 for the service? my bet is on the former
Oct 10, 2025 | 12:17 pm
#18
Join Date: Sep 2024
Posts: 1,752
yup my mistake. but doesnt change the math much, since the tax rate is decreased for both the 7% apy and comparable high yield savings. so now the figures are something like $461 vs $272. the different is ~$190 and only $82 after deducting what OP charges
Oct 11, 2025 | 10:56 am
#19
Original Poster
Join Date: Dec 2024
Posts: 14
1) 7% APY includes the effect of compound interest. if you already have 10k in the account, any interests earned during the year is above the 10k, which do not enjoy the higher interest rate. hence it is impossible for you to earn $700 per year. at best, it is 6.785% or $678.5
2) US median income is about 50k, which correspond to the 22% tax bracket. you add in state and local taxes (it varies, but let's say 10% total*) and 7.65% for FICA. this brings your total taxes to 39.65%. i will just round this off to 40%, so the interests after taxes is $407. for people who earn more and hit another income bracket, this number is going to be smaller
of course, the numbers would be better for some and worse for others depending in income and where you live
*the lowest state and local taxes per capita is $4,722 (State and Local Tax Collections Per Capita by State, 2025)
if i open an account for my wife, the costs to me also double, so no benefit there. unless you are hoping that the wife doesnt work. but i think most family are dual income nowadays. similarly, every additional account i have incur costs and hence give me marginal returns for my efforts
one can do what you suggest here, have the headache of maintaining many accounts, face decreasing interest rates, have their interests taxed and lost as payments to you, or one can just invest those money. as the interest rate falls, this is going to make less and less sense mathematically; even if the need for your services remain, they can no longer justify your services
also, many of these CUs have some requirements; they maybe geofenced or required some membership or donation or etc. the initial effort to set up these accounts also means the population is more niche. and for people who are willing to go through such lengths to set up these accounts, are they more likely to do 15 transaction themselves or will they pay $108 for the service? my bet is on the former
2) US median income is about 50k, which correspond to the 22% tax bracket. you add in state and local taxes (it varies, but let's say 10% total*) and 7.65% for FICA. this brings your total taxes to 39.65%. i will just round this off to 40%, so the interests after taxes is $407. for people who earn more and hit another income bracket, this number is going to be smaller
of course, the numbers would be better for some and worse for others depending in income and where you live
*the lowest state and local taxes per capita is $4,722 (State and Local Tax Collections Per Capita by State, 2025)
if i open an account for my wife, the costs to me also double, so no benefit there. unless you are hoping that the wife doesnt work. but i think most family are dual income nowadays. similarly, every additional account i have incur costs and hence give me marginal returns for my efforts
one can do what you suggest here, have the headache of maintaining many accounts, face decreasing interest rates, have their interests taxed and lost as payments to you, or one can just invest those money. as the interest rate falls, this is going to make less and less sense mathematically; even if the need for your services remain, they can no longer justify your services
also, many of these CUs have some requirements; they maybe geofenced or required some membership or donation or etc. the initial effort to set up these accounts also means the population is more niche. and for people who are willing to go through such lengths to set up these accounts, are they more likely to do 15 transaction themselves or will they pay $108 for the service? my bet is on the former
You are making an argument seemingly to invest in stock market or the like, where you can benefit tax-wise from unrealized gains.
If one wants to invests all his saving into such options, than this is obv not for them.
If however, you want to diversify savings, it can be a smart option to buy CD or invest in high interest savings account. Obv less risk = less reward.
Also many people want cash that's readily accessible to pull out at anytime for an emergency fund or to de-risk etc.
Once you are doing that, it would only make sense to want a higher apy, and not somehow prefer a lower apy to save on taxes. You also are using a oversimplistic way of calculating taxes without included write-offs, deductions, etc etc etc.
I don't think this is the place to debate taxes as it's got little to do with Credicated, BUT for those who want to earn 7% (if u invest 9.4k, u can earn the full 7% after compounding if u really want to) on CASH with ZERO risk, this is def a good option IMO.
Obv as interest rates fall u will earn less, but the point is that ur earning MORE than other traditional low risk investments (by a few % margin - say 6% vs 3% or 5% vs 2%) + ur cash remains accessible to use (unlike a CD).
There are multiple of such accounts that are not geofenced and it honestly takes 15 min to set up (even with a $5 donation requirement). U can look at the full list at Dr of Credit.
Interestingly... the 59 multi plan is our most popular product and averages more subs per user than our other plans (implying that ppl use this plan to hit min transaction req on MULTIPLES of such savings accounts - more than they do to keep multiple CC accounts active)
I know it's different, and def not for everyone. I actually didn't have it as part of the site originally until a user requested it (I had never even heard of such accounts myself!), and now it's a hit
Oct 11, 2025 | 6:35 pm
#20
FlyerTalk Evangelist
Join Date: Dec 2006
Location: Pacific Northwest
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Posts: 21,476
I have one card, the Amex Everyday card, that gives me 20% more points for billing periods in which I have at least 20 transactions. When I originally got the card, I used it for groceries (2X) and split my purchases into multiple transactions at the self service checkout counter (usually 2 or 3), which would fairly easily let me reach my 20 transactions per month. But I stopped worrying about that when I switched my grocery spend to other cards. Now the Everyday card is the “understudy” for when I get fed up with the Plat fees and coupons and cancel the acts as it then keeps my MRs alive. I keep it alive with the earlier mentioned Patreon subscription.
Merchant offers are sometimes a good reason to put spend on an otherwise sub-optimal card.
I have one card that Barclays has threatened multiple times to close due to inactivity (Arrivals). I will call them tomorrow and close the account. Not worth keeping open. My goal is to simplify my card fleet over the next few years, so some need to go.
Merchant offers are sometimes a good reason to put spend on an otherwise sub-optimal card.
I have one card that Barclays has threatened multiple times to close due to inactivity (Arrivals). I will call them tomorrow and close the account. Not worth keeping open. My goal is to simplify my card fleet over the next few years, so some need to go.